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- Gold Seeker Closing Report: Gold and Silver End Slightly Lower
- Market Outlook: The Day Of Reckoning Draws Near
- Indonesia ETFs Hold Their Ground In Global Crisis
- Mining Sectors Two Biggest Risks
- ‘Unsinkable’ Gold
- Chen Lin: Betting on Gold and Silver Stocks
- Liberty Dollars may be subject to seizure
- Gold Fell 2.96% Last Week – Further Falls Possible but Downside Limited
- Gold, politics, and Venezuela
- Fox News conducts a shocking interview with Ron Paul
- What to look for in cheap gold stocks
- Gold Coins: The Mystery of the Double Eagle
- View From the Turret: Return From Wyoming
- Gold & Silver Market Morning, August 29, 2011
- The World’s Supreme Test for Gold
- Gold 2006 vs Gold Today, Does It Look Familiar?
- Gold price correction was short lived
- Richard Poulden talks with James Turk
- Storm Pennants Are Flying In Stocks and the Dollar
- John McClintock: Gold Producers Riding the Risk Trade
- Metal Storm
- Gold & Silver - Deep Correction Due? - Part 2
- Gold price reaches parity with platinum price
- Gold Market Update
- Silver Shield’s Final Warning
- Pure Media Bias on Gold
- “Gold Is Pale Because It Has So Many Thieves Plotting Against It”
- What Could Lie Ahead for the S&P 500 & Gold
- Silver Market Update
| Gold Seeker Closing Report: Gold and Silver End Slightly Lower Posted: 29 Aug 2011 07:14 AM PDT Gold rose over $30 in afterhours access trade on Friday and held over 1% higher in Asia today before it fell in early New York trade to as low as $1778.78 by about 10:15 AM EST, but it then bounced back higher in the last few hours of trade and ended with a loss of just 0.36%. Silver dropped to as low as $40.415 before it also rebounded, but it still ended with a loss of 1.12%. |
| Market Outlook: The Day Of Reckoning Draws Near Posted: 29 Aug 2011 05:56 AM PDT By Eric Parnell: It's only a matter of time. While market participants and the media spent much the last week fussing about what Fed Chairman Ben Bernanke would say on Friday in Jackson Hole, the situation in Europe continued to unravel right before our eyes. European leaders were never able to get ahead of the crisis as it unfolded over the last few years, and it now appears that the day of reckoning is drawing near. As a result, it is worthwhile to consider how to prepare accordingly, particularly given a U.S. equity market that continues to defy reality. Greece provided us with the most glaring evidence of the deteriorating situation in Europe. During the past week alone, Greece's 2-year government bond yields rose by over 8 percentage points to 46%. Yes, that's 46% for Greece to borrow money for two years. The message delivered by the market by these yields is that Complete Story » |
| Indonesia ETFs Hold Their Ground In Global Crisis Posted: 29 Aug 2011 05:49 AM PDT By ETF Database: While 2011 may have gotten off to a good start for many equity markets, a summer slowdown has hit stocks across the globe. Worries over the fallout from a downgrade of American debt have now shifted to concerns over more stimulus either by the Federal Reserve or by Congress. Yet more measures coming down the pike seems uncertain at best, leaving the American economy to muddle through its current economic malaise. Meanwhile, in Europe things aren't much better as the debt contagion striking the peripheral markets of Spain, Greece, and Italy is now threatening to strike core nations such as France and Germany as well. As a result of this broad uncertainty and the widespread fears over a double dip recession, many investors have pulled out of stocks and have looked to products such as gold or Treasury bonds as a way to wait out the storm. This has pushed Complete Story » |
| Mining Sectors Two Biggest Risks Posted: 29 Aug 2011 05:25 AM PDT As a general rule, the most successful man in life is the man who has the best information Country Risk - Where the political and economic stability of the host country is questionable, and abrupt changes in the business environment could adversely affect profits or the value of the company's assets. Resource nationalism – The tendency of people and governments to assert control, for strategic and economic reasons, over natural resources located on their territory. The major benefit for developing countries from natural resource development comes in the form of:
There can also be indirect benefits such as knowledge and technology transfers. Foreign investments can also involve infrastructure investments, sometimes on a massive scale, like electricity, water supplies, roads, railways, bridges and ports.
Today many governments are looking at ways to get more money from miners as companies report record profits – the higher the returns and the higher the profits, the greedier governments become. As commodity prices rise governments try to boost their share of the proceeds from their countries energy and mining sectors.
The PricewaterhouseCoopers Mine 2011 survey highlights what governments across the globe are looking at in regards to the world's top 40 miners:
In 2011, Resource nationalism became the number one risk for mining companies. Miners are an easy target as mining is a long term investment and one that is especially capital intensive – mines are also immobile, so miners are at the mercy of the countries in which they operate. Outright seizure of assets happens using the twin excuses of historical injustice and environmental/contractual misdeeds. There is no compensation offered and no recourse.
"Resource nationalism is taking other forms as well, including greater controls on foreign participation, mandated beneficiation, use it or lose it demands and mandated government participation." Ernst & Young Global Mining & Metals Leader Mike Elliott
The result is a spate of recent news regarding resource nationalism:
"We know it's tempting, at a time when government debt is mounting and metal prices are rising, for some governments to try to grab an even higher proportion of the revenue from mining. But we urge governments to remember that the cumulative effect of these unreasonable tax hikes will be to push up world prices and slow global growth." The Prospectors and Developers Association of Canada (PDAC) President Scott Jobin-Bevans
Skills Shortage
A combination of mass retirements and increasing natural resource demand from emerging economies has created a crisis in the resource extraction sector – one which is definitely not on investor's radar screens.
Increased resource demand is driving demand for skilled workers. A shortage of skilled workers remains the second biggest business risk for mining in 2011 (as it was in 2010) and is forecast to be the number two risk for miners again in 2012.
Skills shortages are global, shortages are happening in South Africa, Australia, Canada and South America. A skills shortage slows growth and increases costs, projects are being deferred or even cancelled outright due to the inability to staff operations – tighter labor markets also provide unions with greater bargaining powers when dealing with companies over wage settlements and other disputes.
The Mining Industry Human Resources Council (MIHRC) estimates that over 60,000 people employed in the mining sector are expected to retire by 2020 but that the industry will need an additional 100,000 people just to maintain current levels of production.
The Petroleum Human Resources Council of Canada warned a severe oil patch labor shortage is looming and that the "patch" will need to hire 24,000 new employees by 2014.
Weak metal prices during the 1980s and 1990s killed the resource sector's intake of talent – there's not many people between 30 and 50 in mining anymore.
The existing shortage of skilled personnel, the imminent retirement of so many baby boomers (many are mid level managers), the skills supply gap in the 1980's and 1990's combined with the mining sector being in direct competition with the energy sector for people to train means prospects are bleak for either industry to obtain the necessary bodies and minds.
Analysts say attracting and retaining increasingly scarce skills will:
The pool of available skill sets, the mine executives/managers, the miners, the engineers, drillers, geologists, mechanics, and other trades needed isn't very deep. This labor shortage is going to increasingly hurt the industry in the coming years.
Conclusion
Many governments are reviewing old agreements and renegotiating contracts. There are now many places, and the number is seemingly growing every day, where shareholders could, without warning, receive news that their operations have been taken over by the government and/or its friends, or that permits are suddenly suffering delays or have been cancelled outright.
We've seen far too many instances of companies and their shareholders losing assets that were lawfully theirs. If the management side of the companies we invest in is so important then maybe we should start regarding the management of the country they operate in as at least as important?
Mining sector employment trends are closely connected to:
Currently many mining companies are having trouble finding skilled workers – there is a "massive talent gap." And it's going to get worse – the oldest baby boomers are turning 65 years old in 2011 – and the global mining industry is experiencing the biggest wave of workforce retirements in 70 years.
In the next five years one-third of the mining workforce will be eligible for retirement. According to the Mining Industry Human Resources (MiHR) Council's latest labor market information report, "Canadian Mining Industry Employment and Hiring Forecasts 2010" the mining industry will need approximately 100,000 new workers by 2020.
As if the mining sector didn't already have enough to worry about.
Mine production of many metals is showing a number of similarities:
Increasingly we will see falling average grades being mined, mines becoming deeper, more remote and come with increased political and nationalization risk. Extraction of metals from the mined ore will become increasingly more complex and expensive, even more so when one considers the effects of Peak Oil – the cost of technology innovation to power mining will be very high.
Broad spectrum peak commodities is a cause for concern over the longer term. In the shorter to medium term there are several serious concerns in regards to global resource extraction that we need to consider:
Junior resource companies with fully staffed, secure projects in safe, stable countries should be on every investors radar screen. Are they on yours?
If not, maybe they should be.
Richard (Rick) Mills If you're interested in learning more about the junior resource sector, bio-tech and technology sectors please come and visit us at www.aheadoftheherd.com Site membership and our AOTH newsletter are free. No credit card or personal information is asked for. *** Richard is host of Aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 300 websites, including: Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Uranium Miner, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, and Financial Sense. *** Legal Notice / Disclaimer This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.
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| Posted: 29 Aug 2011 04:37 AM PDT Ever since the tragic sinking of the Titanic on her maiden voyage, the word "unsinkable" has acquired a very cynical connotation in our society. Rather than representing unsurpassed seaworthiness, it has come to represent the arrogance and folly of believing one's self to be beyond risk. With a new tidal-wave of "gold bubble" propaganda having swept through the mainstream media as gold made its latest surge, quite obviously many market sheep have been duped into viewing gold as the new 'Titanic'. Yet as we watched gold getting "torpedoed" last week still another time by the banking cabal there is only one word we could use in describing the performance of the yellow metal: buoyant. The bankers (and their minions in the media) were positively giddy as they proclaimed mid-week that gold had suffered "its worst three-day plunge since 1980". These deceitful bears were markedly less-exuberant as gold roared back with one of, if not the biggest two-day rally in its trading history – totally negating the significance of the prior plunge. It was a performance which could only be envied by the builders of the Titanic. Readers are right in being skeptical about merely the "chart strength" which gold has demonstrated, however. As I continually remind people "technical analysis" is the least significant aspect of market analysis. This will naturally enrage the "T/A jockeys", who like to pretend that technical analysis is all-powerful – simply because it is fast and easy, and requires no genuine comprehension, other than the ability to spot patterns in pictures. This complete reliance upon charts rather than fundamentals is more than merely simplistic, it is dangerous. This is due to the fact that all technical analysis is based upon a long list of assumptions – all of which must be true, or all statistical validity of such analysis instantly evaporates. Thus the appropriate way to demonstrate the "unsinkable" status of gold is through fundamentals-based analysis rather than statistical "hocus pocus". It is here that gold shines even brighter. Ironically, gold's remarkable buoyancy is a subject of great interest to silver-bulls. Why? Because of the gold/silver price ratio. Knowledgeable silver investors know that not only will the gold/silver ratio narrow to at least its historical average of 15:1, but because of the complete destruction of silver inventories (thanks to decades of bankster shorting) the ratio will likely narrow ever further than 15:1. Given these parameters, cautious silver investors naturally have one burning question in their minds: why am I (and other silver-bulls) absolutely confident that the price of silver will rise up dramatically to close the gap in this ratio rather than the price of gold falling down to that price level? Thus gold's "unsinkable" fundamentals are every bit as important to silver investors as gold investors themselves. Naturally the most important of these fundamentals is currency dilution. The equation is very simple. We have one form of currency (beautiful, durable, and precious) whose supply is increasing by roughly 2% per year. Stacked against that we have an assortment of paper currencies being diluted by double-digit amounts every year. Worse still, there is absolutely nothing "backing" this paper, and most of the nations issuing these currencies are rapidly progressing from mere insolvency to outright bankruptcy. As I have pointed out on several previous occasions, un-backed paper currencies are literally nothing more than unsecured "IOU's" of the governments issuing these currencies. It is a tautology that the "value" of an (unsecured) IOU from an insolvent debtor is zero – or nearly so. Conversely, gold is a currency which is not only free from any claims of debt but possesses its own intrinsic value (as a superior form of "money"). Such a comparison is no comparison at all. We have more than a thousand years of history of "fiat currencies" (i.e. money backed by nothing) being inflicted upon various populations again and again – always with the same result: the paper currency system collapses. Meanwhile, gold has not only "stood the test of time" in being universally regarded as "good money" for nearly 5,000 years, but it has perfectly preserved its value over those millennia. |
| Chen Lin: Betting on Gold and Silver Stocks Posted: 29 Aug 2011 02:30 AM PDT |
| Liberty Dollars may be subject to seizure Posted: 29 Aug 2011 02:17 AM PDT Federal officials now say that Liberty Dollars may be subject to seizure as "contraband." The U.S. Attorney's Office that prosecuted NORFED founder Bernard von NotHaus states that individuals owning Liberty Dollars could have them confiscated, even if they are just holding them in their collection or displaying them for educational purposes, a reversal of earlier comments from the same office. In addition, a U.S. Secret Service official stated that while he could not offer a formal ruling, he suggested that Secret Service agents would be duty-bound to confiscate the medallions once marketed as an alternative currency before the arrest and conviction of von NotHaus on federal charges, including counterfeiting. Concerns about the possible confiscation of the medallions led ANA officials to reject a collector's request to exhibit his collection of Liberty Dollars during the recently concluded ANA World's Fair of Money. http://www.coinworld.com/articles/li...ct-to-seizure/ |
| Gold Fell 2.96% Last Week – Further Falls Possible but Downside Limited Posted: 29 Aug 2011 01:43 AM PDT |
| Posted: 29 Aug 2011 01:19 AM PDT |
| Fox News conducts a shocking interview with Ron Paul Posted: 29 Aug 2011 12:58 AM PDT From Economic Policy Journal: Chris Wallace interviewed Ron Paul this morning on FOX News Sunday. Chris Kozlowski sends along the below clip and writes: I just sat through probably the best interview Ron Paul's ever had. At one point Chris Wallace asked Ron Paul, "What is Austrian economics and who were Mises and Hayek?" I damn near fell out of my chair... Read full article (with video)... More on Ron Paul: Ron Paul reveals his favorite gold stocks The Ron Paul op-ed everyone will be talking about this weekend Ron Paul: Congress just handed a huge amount of power to this hated group |
| What to look for in cheap gold stocks Posted: 29 Aug 2011 12:56 AM PDT From Mineweb: ... With gold miners, in general, so attractively valued relative to the gold bullion price, the question becomes: Which stocks are the most compelling and have the best leverage to robust precious metals prices? First, an investor could begin the process through elimination. FINRA highlighted some of the key warning signs when analyzing gold stocks, such as claims of being a "buyout target," or speculative claims about reserve growth, and grandiose predictions of exponential growth, to name a few. FINRA says investors should be wary of "free lunch" programs that claim profits in gold are "easy." And we agree. Research from geologist Robert Sibthorpe shows that only one in 2,000 (0.05 percent) companies would ever find 1 million ounces of gold, and that only a third of those would be able to turn that find into production. In addition, research from Barry Cooper at CIBC shows that these discoveries are becoming even more difficult. There were 51 gold/copper porphyry discoveries of +3 million ounces during the 1990s, but only 24 such discoveries occurred during the 2000s. In order to find the diamonds in the rough, I use what I call... Read full article... More on gold stocks: How to make 1,000%-plus on junior mining stocks These stocks could predict the next big move in gold Richard Russell: Three big bullish signs for gold stocks |
| Gold Coins: The Mystery of the Double Eagle Posted: 28 Aug 2011 11:24 PM PDT The most valuable coin in the world sits in the lobby of the Federal Reserve Bank of New York in lower Manhattan. It's Exhibit 18E, secured in a bulletproof glass case with an alarm system and an armed guard nearby. The 1933 Double Eagle, considered one of the rarest and most beautiful coins in America, has a face value of $20—and a market value of $7.6 million. It was among the last batch of gold coins ever minted by the U.S. government. The coins were never issued; most of the nearly 500,000 cast were melted down to bullion in 1937. Full story here, well worth the read. http://finance.yahoo.com/family-home...Rjb2luc3RoZQ-- |
| View From the Turret: Return From Wyoming Posted: 28 Aug 2011 10:51 PM PDT
The Federal Reserve Chairman managed to avoid promising any specific stimulative measures, and still managed to spark a winning week on Wall Street. Not such a bad outcome – especially considering the recent economic and market action… For the week, the Dow rallied 4.3% – a fairly robust return for only five trading sessions. It's too bad that this rally follows a 15% drop over the previous 4 weeks, and still leaves the major indices in poor technical shape. Despite the positive action last week, the overall market still looks bearish from both a fundamental and a technical perspective. Estimates for economic growth continue to be ratcheted down (both domestically and internationally), and the risk of a renewed global recession is increasing. Most economists who maintain a bullish perspective point to emerging market growth as the primary global economic growth driver. But according to one of the presentations at the Jackson Hole economic summit, this emerging market growth is directly tied to demand from the developed world. If Europe and the US fall back into a recession, the catalysts for emerging market growth can be shut down very quickly. From a technical perspective, the sharp drop in equity prices has caught investor attention and is likely to result in even more selling. Retail investors and institutional managers alike will continue to monitor portfolio risk levels and may very well use last week's rally to begin unloading stocks at a more "reasonable" price. With only a few weeks of equity selling behind us, it's unlikely that all of the weak hands have "thrown in the towel." So at this point, the broad sentiment doesn't appear negative enough to support a sustainable rebound for equities. Heading into the week, our trading book is bearishly slanted with established positions in breakdown opportunities along with our trimmed, but still material long exposure to gold mining stocks. We continue to watch for new setups related to a "flight to safety" and capital rotation away from risky positions – while at the same time being content to keep exposure below "normal" activity levels. Below are some of the areas we are watching heading into what looks to be another volatile week… Social Media Uncertainty The social media bubble has been one of the more exciting areas for speculative traders this year. Want to trade like a Global Macro pro? Learn the secrets of the Global Macro titans. Sign up for your FREE Report now! The early movers like Pandora Media (P) and LinkedIn Corporation (LNKD) have had mixed success so far. LinkedIn was brought to market at $45 per share – higher than expectations and immediately began trading at a 100% premium to the initial price. Since that time, the stock has pulled back to the mid $70′s as growth uncertainty makes it difficult to value this company. Pandora, on the other hand, didn't get quite the warm reception. The stock was offered at $19 and closed at a discount the first day of trading. Two weeks into its life as a public company, the stock managed to crawl back above the offering price, but the wave of "risk-off" selling on Wall Street has pushed the stock back down to make new lows in August. Of course the stocks traders are really excited about still haven't hit the market yet. Facebook is still not expected to go public until sometime in 2012, and Groupon Inc. (GRPN) is tentatively planned for September.  Considering the hype that surrounds these speculative trading vehicles – and the mounting risk in the overall market, we're more inclined to fade (sell) the social media names at key inflection points, rather than going along for the joy ride. It's interesting to note that last week, Groupon's CEO lashed out at critics stating that the company was still experiencing robust growth and defending his company's use of a questionable accounting metric. This after the company closed a number of offices in China after running into challenges. With equity prices under pressure, Groupon is now facing significant challenges in terms of receiving an attractive valuation when initially pricing its stock. Pandora had a positive day Friday after the company announced earnings. The company is still posting quarterly losses, but revenue doubled over the same quarter last year. If the stock is able to rally back up towards the original IPO price, it may turn out to be an excellent area to short. Initial investors still trapped with a cost basis near $19, will likely use any rally to bail out of shares, and as competition increases Pandora's IPO could end up looking a lot like Vonage Holdings (VG) after its 2006 debut.
Dividend Stocks Attract Capital There are two specific bullish concepts helping to support dividend stocks right now.
Over the weekend, the Wall Street Journal noted that mutual funds focusing on dividend stocks have raised $12.6 billion this year while the broad equity category has seen distributions of $25 billion so far. With capital pouring into this area, dividend stocks can be attractive trade opportunities. Of course, we are still looking at price action to determine when to take a position, and we are much more interested in price appreciation than in holding long-term for a 5% yield. But if yields are attracting capital, dividend trades could set up with less risk and better returns than a number of other speculative opportunities. Duke Energy Corporation (DUK) is a good example of a stable business with a healthy yield. The company has a 5.4% payout and while the stock did lose value at the beginning of the month, it has already reclaimed it's July levels and is trading above key moving average support.
A few other names mentioned in the article that look attractive from a trading perspective are Procter & Gamble (PG), Abbott Laboratories (ABT), and Coca-Cola Co (KO).  Shippers – Deep Value (If They Survive) As the global economic picture worsens, dry bulk shippers have taken on water. A number of stocks in the area are trading at prices that basically represent a call option on the future business. Day rates have dropped to a level where it is difficult to operate a fleet profitably, and overcapacity makes it difficult to bid for contracts with any expectation of covering more than voyage expenses. It's almost certain that the industry will experience some bankruptcies and/or distressed acquisitions over the next year. But for companies who survive the economic storms and maintain a healthy fleet, the long-term benefits could be very attractive. Once the oversupply is depleted (through ship retirements or increasing demand), day rates are likely to increase. For shareholders of the surviving companies, returns could quickly reach triple digit percentage gains or much more. As an example, DryShips Inc. (DRYS) is trading at $2.73 per share, despite the fact that the company is expected to post profits of $0.80 both this year and next. If investors are willing to pay just 10 times earnings once the tide turns, DRYS could quickly rally to $8.00 – giving investors a gain near 193%.
Of course, as swing traders we are waiting for price action to confirm that a rebound trade is off and running before jumping into a deep value situation. But based on the potential target price, DRYS and other "unloved value stocks" could represent great trading opportunities after investors have bailed out of speculative positions. It's important to note that while we are continually tracking trade opportunities and looking for profitable setups, there are times when caution is more important than aggression. In today's market, extreme uncertainty and significant volatility have us parking a significant amount of capital on the sidelines. There will be times when hitting the accelerator and trading aggressively makes sense. But today we want to take small shots at attractive opportunities while still protecting our capital. As Livermore noted, capital is a trader's "inventory" and without inventory we can't make a profit. Protect that capital carefully and trade 'em well this week! MM |
| Gold & Silver Market Morning, August 29, 2011 Posted: 28 Aug 2011 09:00 PM PDT |
| The World’s Supreme Test for Gold Posted: 28 Aug 2011 08:45 PM PDT "Gold is now at its supreme test of desirability. Either it will become much more valuable, or the trend will be away from it altogether. And today economists are not agreed on which will ... |
| Gold 2006 vs Gold Today, Does It Look Familiar? Posted: 28 Aug 2011 08:04 PM PDT
On April 22nd, we wrote an article "Silver 2006 vs Silver Today, Does it look Familiar?" In this article, we will compare the recent price behavior in gold to the price behavior in 2006, and see if we can learn something from the past. First, let's have a look at the gold price in 2006.
Now, let's have a look at the Gold price in 2011:
Now let's place the two charts next to each other, to see the similarities:
If this isn't clear enough, have a look at the chart below, which lays one chart on top of the other…
For those who believe gold will go to $5,000, have a look at the following interesting post, written on June 24th: For those who think the recent dip towards $1,700 was the bottom of a sharp correction and who missed out on this chance to buy the dip, consider reading the following post: ***** You can now try out our services during 5 days for only $5.*****
If you have any questions, feel free to contact us at info@profitimes.com This is not a recommendation to Buy or Sell. Do your own Due Diligence.
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| Gold price correction was short lived Posted: 28 Aug 2011 07:45 PM PDT Spot gold is once again trading over $1,800 per ounce after a sharp sell-off last week which saw a drop of over $200, from the new high of $1,913 to an interim low of $1,702. This 11% correction did ... |
| Richard Poulden talks with James Turk Posted: 28 Aug 2011 07:30 PM PDT Richard Poulden, Director of Power Capital Financial Trading (PCFT), and James Turk, Director of the GoldMoney Foundation, talk about the new Pan Asia Gold Exchange (PAGE) and its potential to change ... |
| Storm Pennants Are Flying In Stocks and the Dollar Posted: 28 Aug 2011 07:00 PM PDT Resource Insights |
| John McClintock: Gold Producers Riding the Risk Trade Posted: 28 Aug 2011 07:00 PM PDT With the price of gold soaring to over $1,900 an ounce and investors abandoning equities for commodities, John McClintock, equity research analyst at Mackie Research Capital, sees gold mining... Visit the aureport.com for more information and for a free newsletter |
| Posted: 28 Aug 2011 06:23 PM PDT --Well it looks like the big storm on America's east coast has passed without causing social and economic chaos. In fact, the stock exchanges have made it clear they will be open for high-frequency trading and rampant speculation when the bell rings on Monday. Mother Nature was no match for markets, this time. --You'll notice we've omitted the word "free" from its usual place in front of "markets". Financial markets are anything but free markets these days. They've become a high-stakes casino full of short-term players who hang on every word uttered by the Floor Manager of the casino, Ben Bernanke. It makes sense. Bernanke determines the price of credit for all the players in his game. --Friday's action in America all but guarantees a good day today in Australia. But it was confusing anyway. Speaking in Wyoming, the Fed chairman said, "Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years." --The absurdity of this comment must have confused investors. Shortly after they were made, markets and the gold price fell. It sounded like the chairman was saying no QE3 would be forthcoming because the economy was just fine. Then, because he said the economy was just fine, stocks rallied. --Utter insanity. And by the way, was Bernanke really serious about the "growth fundamentals" of the US economy? Was he referring to the 9% unemployment rate, the continued implosion of residential housing, the soaring government debt, the declining real wages, the shrinking manufacturing sector or all of the above? --With central bankers as clueless as Mr. Bernanke, it's no wonder the gold exchange traded fund (NYSE:GLD) finally surpassed the S&P exchanged traded fund (NYSE:SPY) as the largest ETF by market cap, at least for a bit. GLD has a market cap of $76.7 billion on gold's run to US$1898/oz. That beat SPY's market cap of $74.4 billion on the same day. --You can see from the chart below why GLD has become popular with momentum players. It's clobbered SPY ever since Bernanke began using Quantitative Easing to manipulate markets. The desire to own gold is a desire for sound money. GLD isn't really gold, mind you. It's just a claim on gold. But the idea of claiming gold and owning it is catching on the more people understand how foolish monetary orthodoxy is. --That said, gold fell nearly $200 in a few sessions last week. Part of that was related to the increase in initial margin requirements on the Chicago Mercantile Exchange (CME). CME raised initial margins by 27% from $7,425 per 100-ounce contract to $9,450. It also increased the margin for hedging by 22% to $7,000 per contract, from $5,000. --Increased margins require speculators to front up more cash to speculate on gold through the futures markets. As with silver, increasing the margin requirements shakes out the leveraged players in the market. Raising the ante to play in the futures markets shakes out the trend-hopping traders and weak hands as well. Rather than seeing it as the popping of a non-existent gold bubble, we see it as the necessary process of a bull market grinding its way up. --Putting our money where our mouth is, we took the chance to check in at the bullion dealer in Sydney while we were there for business last week. Trouble was, there was a queue to get in the front door. There was a queue for financial disaster insurance! --Interestingly, our informal survey of those willing to answer said that about half of those in line were buyers and half were sellers. This confirmed to us that the gold bull market still has some room to go. The move to $1900 was nearly parabolic. But on the street, people still see price hikes as a chance to sell. When the big move in gold comes, no one will want to part with it. --If the line at the bullion dealer was a mild surprise, the party at the Hilton was not. BHP Billiton was putting on a show at the hotel your editor stayed at. And oh what a show it was! --The corporate successor to Broken Hill Petroleum reported the largest annual profit in Australian corporate history. On revenues of US$71.7 billion, the company reported a net profit of US$23.6 billion. That was a handy increase of 86% over last year. --Revenues in the iron ore group alone were up 83% to $14.4 billion. Base metals group revenue was up 36%. And petroleum group revenues were up 22.3%. As you can see from the company's chart below, the underlying profit margins for all three groups exceed 50%. That's what made for such a blow out result.
--But hold the parade and put away the crown of laurels for Marius Kloppers. The details of the company's presentation reveal a sign that this result is...the top. The top of the commodity cycle. The last and final evidence of the credit super cycle. The pinnacle...the zenith...the apex...the apogee. Why? --Margins were definitely up. But volumes were "negative" to use the company's own word. It said fully $17.2 billion of underlying profit was due solely to rising commodity prices for coal and iron ore. This offset the lower coal export volumes as a result of flooding in Queensland. --This last result reflects, we're willing to bet, a cyclical peak in the iron ore and coal prices. More supply is set to come on line this year. And there's no telling what global demand is going to be when the major developed economies face contraction and recession. Higher volumes on lower prices next year will make this year's profit record hard to match or exceed. --If BHP can do better next year, it will be because of its growing petroleum division. It will because of energy. The acquisition of shale-gas assets in America featured prominently in the company's presentation. And it appears to us that structural shift is on within the company that makes energy the real growth area (and the real profit area). --BHP's strategy might not matter if China's property bubble rapidly deflates. But we'll make that case in more detail tomorrow. Until then! Dan Denning |
| Gold & Silver - Deep Correction Due? - Part 2 Posted: 28 Aug 2011 05:52 PM PDT Gold Forecaster |
| Gold price reaches parity with platinum price Posted: 28 Aug 2011 05:50 PM PDT |
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| Posted: 28 Aug 2011 05:00 PM PDT Don't tread on me |
| Posted: 28 Aug 2011 04:32 PM PDT Andy Sutton |
| “Gold Is Pale Because It Has So Many Thieves Plotting Against It” Posted: 28 Aug 2011 04:00 PM PDT |
| What Could Lie Ahead for the S&P 500 & Gold Posted: 28 Aug 2011 01:39 PM PDT JW Jones & Chris Vermeulen – http://www.optionstradingsignals.com/specials/index.php Now that Mr. Bernanke's speech is old news, what was the financial media thinking exactly? A significant number of financial writers have been anticipating discussion of QE III or QE III Lite which clearly were never even on the Fed Chief's radar this week. The focus of the Jackson Hole Summit was how to achieve long-run growth, not conduct discussion of monetary policy. QE III will not be discussed openly until the next FOMC meeting in September, which noticeably was extended to two days. Besides the extension and the Fed Chairman's prediction of growth in the back half of the year, the remainder of Mr. Bernanke's speech was nothing more than a brief synopsis of what he has already said in the recent past. While Chairman Bernanke focuses on the U.S. economy, I have been more inclined to monitor the action across the pond. Price action in Europe is having a major impact on financial markets here in the United States. Traders are monitoring credit default swap (CDS) spreads on European sovereign debt as well as on domestic and European banks. Recently U.S. banks have seen the CDS swaps on their debt rising indicating that the marketplace believes their debt is a greater risk to investors. While the price action is nowhere near the 2008 & 2009 levels, current prices are relatively consistent with what was seen during the correction in the late spring of 2010. While there is no reason to panic at this point, this is a trend that I will be monitoring closely going forward. For now, I continue to believe that equity markets will rally in coming weeks as conditions are extremely oversold. The price action so far today makes sense as the wild price swings helped flush out weak hands that were long. Consequently, the snap back rally pushed shorts into stop levels as well. A significant move lower does not seem likely at this point, but a retest of the recent lows is possible, if not probable. I would remind readers that stock market crashes generally happen within the context of an oversold market. While the likelihood of a crash is remote, it is still possible and tight risk definition in this environment is warranted regardless of which side of the tape a trader is playing. One price chart that I have been watching closely is the German DAX. The German DAX is presently a thermometer for traders to monitor the situation in Europe. The reason the German stock market index is so important is due to the financial strength of Germany within the Eurozone. Without Germany, the Eurozone would crumble in on itself and the Euro currency would be in trouble. Recently Germany's equity markets have been crushed and the daily chart below illustrates the recent carnage: Another metric I monitor regularly is market momentum. The chart below illustrates the number of domestic stocks trading above their 200 period moving averages. As can be seen below, the U.S. equity market has not been this "oversold" since back in 2009. Chart courtesy of Barchart.com. In my previous article posted back on August 18th, I discussed the likelihood for stocks to pullback and put in some form of a basing pattern. I wrote the following statement in that article: "It is entirely plausible that Mr. Market thrusts lower from here to shake out longs. If that scenario plays out it could potentially carve out a double bottom or another basing pattern which would give active traders another entry point to get long." Since August 18th, we have seen the S&P 500 push lower and there is a double bottom on the daily chart which is capturing quite a bit of attention in the trading community. I would also draw your attention to the wedge pattern that is also present. A breakout higher or lower out of this wedge pattern will be the clue that will indicate Mr. Market's short term price direction. I continue to believe we will see a breakout higher, but a retest of the lows is always a possibility. The daily chart of the S&P 500 Index is shown below: In the short to intermediate term, I believe we will see higher prices and a test of the key S&P 1,220 area or possibly a re-test of the key S&P 1,250 price level which corresponds with the March 2011 pivot lows. Additional resistance would come in around the 1,260 – 1.270 area which marks the neckline of the recent head and shoulders pattern which triggered the selloff in the S&P 500. The daily chart of the SPX below illustrates the key resistance areas: Gold Analysis Some traders argue that gold prices are going to rally back sharply in short order, which I find hard to believe. Instead, I am of the opinion that we could see additional downside in the weeks/months ahead in gold prices. There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff. The daily chart of gold is shown below: While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme. While I believe stocks will rally in the short to intermediate term, I am of the opinion that we have officially entered the next phase of the bear market. The next wave lower in stocks is going to be just as severe as the likely rally in gold. The reason I believe gold will rally is primarily due to future weakness in Europe. If European banks have a credit crisis, a sovereign nation unexpectedly defaults, Germany leaves the Eurozone, or a currency crisis transpires gold prices should soar while U.S. equity prices tank. While it is far too early to make that determination, if the S&P 500 puts in a lower high on this next advance higher and consequently takes out the recent lows on a selloff, the bear will be in full swing and gold prices should take off. The chart below illustrates my expectations for the S&P 500 in the future: The next few weeks are going to be very telling about the future in domestic markets. Is this just a correction that pushes stocks higher by the end of the year, or is this the beginning of something far worse? For now I am going with the latter, but price action in coming weeks will offer clues about what lies ahead for U.S. equity markets. Right now this is nothing more than speculation, but the next few months should be very interesting. Risk remains exceedingly high. Join Now at http://www.optionstradingsignals.com/specials/index.php for a 24 hour 66% off coupon. This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only. |
| Posted: 28 Aug 2011 01:10 PM PDT |
As Ben Bernanke makes the trek home from the Jackson Hole economic summit, he has to feel pretty happy with his performance.
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